There will always be opportunities - Posted by Lee in TX
Posted by Lee in TX on July 11, 2002 at 12:15:14:
No matter what the economic environment, there will always be opportunities to make a profit if you are agile enough, and if you adjust your game-plan to the current conditions. Don’t let fear stop you from making deals. Just be aware of the market conditions and factor them into your offers.
I was investing in Texas through the eighties when we were hit with the Tax Act of 1986 which took away many of the tax benefits of real estate investing, the oil bust and massive loss of jobs in the oil patch, and the fiasco called the Savings and Loan Crisis.
Many investors who were dependent upon the tax benefits from their real estate investments were wiped out, if their deals did not make economic sense without the tax benefits. Some communities which were based on the oil economy suffered losses in value of the houses because no one was able to buy them and people were out of work. And, lest you forget the RTC and all that, the S&L losses make Enron and Worldcom look like a picnic by comparison.
Yet, there were investors who made money during this entire time! Some made bloody fortunes! I was buying houses like crazy because I could get such tremendous discounts in both price and terms, and a positive cash flow from the rents. I knew people would always need a place to live…housing is a basic human need. And I knew the crisis would not last forever. Houston was on its knees maybe, but it was not going to dry up and blow away. I felt like some over-sexed guy in a harem! I would love for things to get like that again, from a property buying perspective, because I know how to take advantage of those conditions and make a profit. You can too!
When the wind changes, you just adjust your sails to catch it and stay your course. Don’t be dependent on appreciation to make your profit. The same is true for depreciation, which is minor now anyway. Learn to buy right, and structure financing with terms you can live with.
The market value of the properties you hold really only matters if you are planning on selling soon. Be sure you control the timing on this event.
And if you are a buy and sell guy, understand that prices of real estate don’t usually move as rapidly as a stock price. It is not likely that a house will loose 20 percent or more in a single day like some NASDAQ issue hit with bad news. If you buy low enough, you can still sell at a profit, even in a declining market.
Be adaptable, but don’t loose your focus.
Lee in TX